For years, digital transformation has been the mantra of companies around the world. However, despite significant technological investments, many organizations have reached a plateau.
According to Gartner, IT departments allocate a substantial portion of their budgets to maintaining existing systems and operations, rather than innovation. Specifically, IT budgets often allocate around 66% to systems execution and maintenance, leaving only 34%, and far from all of that is spent on growth-focused innovation.
This is not surprising when digital transformation is often seen as a means to an end; as a way to optimize existing processes and reduce costs rather than a catalyst for growth. But what if we changed our perspective and saw our digital assets not only as tools for efficiency but also as engines for generating new value?
That’s where experience innovation comes into play.
Senior Vice President of Strategy at Valtech.
What is experience innovation?
According to IDC’s Global Digital Transformation Spending Guide, businesses worldwide are expected to spend more than £2.6 trillion on digital transformations in 2026, with a five-year compound annual growth rate of 16 .3%.
However, many of these projects become a limited view of optimization.
Experiencing innovation is the next step. It is about going beyond optimization and entering the realm of value creation; It’s about using digital tools and technologies to create new products, services and customer experiences that increase revenue and establish differentiation in the market. Instead of simply streamlining existing processes, use digital advancements to deliver exceptional customer experiences that drive loyalty and growth.
For example, experience innovation for a retailer could result in an augmented reality feature that allows customers to try on virtual clothing and receive personalized recommendations based on their choices, preferences, and body type. Or you could go the other way, turning in-store experiences into digital hybrids that create a more engaging and personalized shopping journey. It can also redefine the organization from within. IKEA demonstrated this by using AI to dramatically reduce customer service workload, allowing them to retrain some support staff into interior design consultants.
This is what it means to transform and redefine customer expectations. By harnessing the power of technology and data, businesses can create customer-centric experiences that are much more engaging and emotionally resonant, increasing satisfaction, loyalty, and ultimately growth.
However, while the potential for experience innovation is immense, four challenges often prevent organizations from realizing its benefits.
The obstacles
First, budget constraints and misaligned priorities. Teams often have many innovative ideas, but struggle to connect them to concrete business strategies and secure the necessary funding. As a result, innovation is often pushed aside and considered a luxury rather than a necessity.
Second, siled organizations tend to impede collaboration. In many organizations, especially mature ones, silos hinder the cross-functional collaboration essential for experience innovation. This fragmented approach makes it difficult to design and deliver truly seamless and engaging experiences.
Third, there is the risk of an “innovation theater.” Sometimes innovation can become an empty buzzword, as companies create innovation labs and design sprints without a clear plan to bring those ideas to market. This often leads to disillusionment and skepticism from senior management, who begin to view innovation as a costly distraction.
Finally, the talent gap. Many companies lack the digital leadership and expertise necessary to drive experience innovation. While there is increasing convergence of CIO and CMO roles, not all organizations have experienced digital product owners who can bridge the gap between technology and business strategy.
So how do you solve these challenges?
Unlocking Potential: A Roadmap to Success
Companies must take decisive steps to move from digital transformation to experiencing innovation. The sequence may vary, but it’s usually best to start by adopting a growth mindset.
While cost optimization is a healthy and necessary practice, it is important to avoid becoming obsessed with it and remember that cost savings can and should be reinvested in growth initiatives. Companies must open their mindset to include revenue generation and consider digital assets as tools to create new value and drive business growth. Establish clear value cases for experience innovation initiatives, demonstrating their potential to generate revenue and contribute to the bottom line.
Then, start developing a customer-centric culture. Cultivate digital leadership and attract people with the skills and experience to drive experience innovation, empowering them to lead change and transform ideas into reality. You can do this by developing internal talent, hiring external experts, or finding new people with a deep understanding of technology and customer experience. Often a mix is best.
These people will then help you finalize your strategy and ensure that innovation initiatives align with overall business objectives and have a clear path to market. They will help you break down organizational silos and prioritize the end-to-end customer experience to ensure every touchpoint contributes to a positive and engaging journey.
The result is a comprehensive experience innovation project that is beginning to work.
The future of innovation in experiences
Industries ripe for experience innovation are numerous and diverse, from automotive and financial services to retail and healthcare.
Each sector faces unique challenges and opportunities, but the underlying principle remains the same: by adopting a customer-centric approach using digital technologies and fostering a culture of innovation, organizations avoid stagnation and instead open new avenues for growth. growth and customer loyalty.
In a world where customer expectations are constantly evolving, innovation is no longer a “nice to have.” It is an absolute necessity. By closing the gap between digital transformation and business strategy, companies can ride the wave of momentum that only experiential innovation can generate.
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